Democratic Republic of Congo's finance minister resigned on Monday following the rejection by the government of his proposed budget for 2003.

A former IMF official, Frederik Matungulu was respected by international donor bodies for his handling of the Congolese economy, and negotiations had started on the cancellation of Congo's $13bn external debt.

But government spokesman Kikaya Bin Karubi said Mr Matungulu had been forced to step down following the refusal of the Council of Ministers to accept his proposed budget for the coming year.

Mr Karubi said the former IMF official had put macro-economic concerns such as keeping inflation down before the needs of the Congolese people.

Loggerheads

He said the majority of ministers and the country's non-elected parliament, which sits in Lubumbashi, wanted salaries to be increased, spending to rise and the internal debt to be serviced.

He said Mr Matungulu had realised he could not work against the will of the rest of government alone, and thus had resigned.

The minister himself repeated earlier official statements saying he had stepped down for personal reasons.

The representative of the World Bank in Kinshasa, Onno Ruhl, said he hoped the government would not change its economic policies.

Progress

Under Mr Matungulu's two years as finance minister, Kinshasa has regained some of the credibility it had lost under Mobutu Sese Seko and Laurent Kabila.

The exchange rate, prices and inflation have all been relatively stable, and for the first time in a decade international funds were being made available for the country's reconstruction.

The World Bank released $450m, the IMF a further $750m.

In addition the World Bank said it would cancel nearly $10bn in external debt if the country continued with its sound policies, and the US Government said it would write off $1bn more.

It is not clear how they will now react.

Mr Matungulu's polices were some of the few real successes President Kabila has been able to claim since coming to power, and the international donors will be concerned by suggestions that the finance minister was pushed out of the government.